Getting out from under the pressure of credit card debt can feel like a major relief. In fact, nearly 90% of Americans feel like they’re “ swimming in debt .” With some discipline and planning, even large amounts of debt can be repaid quickly and responsibly.
The first step to paying off debt is figuring out how much you owe. List out every issuer, balance, and interest rate of each card. Also be sure to include other debts such as student loans, car loans, and medical bills.
Your next step will be to find extra money to help make payments. If any of your debt is secured by a house or car, you could try renting out the home or taking on part time work. Additionally, focusing on cutting back on extra expenses will provide more money to put towards debt repayment.
Once you’ve determined how much extra money you have available, you’ll want to decide which debt to pay off first. Many believe that it’s best to start with the debt with the highest interest rate first. This can mean sacrificing lower balances, but with less interest accruing, you’ll end up saving in the process.
The idea is that if you pay off one balance at a time, you’ll see quicker progress. As you start paying off one debt, apply those same payments to the next debt and so on down the list. If you were able to set aside additional funds, use them to make extra payments.
Another helpful strategy is to negotiate with creditors to lower your interest rate. If you’ve consolidated your bill payments into one account and are making payments on time, this could be an ideal time to negotiate.
Finally, don’t forget that it’s important to have an emergency fund. It can be difficult to start saving while paying down debt, but having extra funds available in the event of an emergency can keep you from relying on credit cards to cover those expenses.
